A Financial Analysis Of Wuhan Iron And Steel Company Limited

Financial statement is not only an important foundation which provides the user with useful financial information but also implying vital contents about management. However, there is special structure, method and goal to organize financial statements. So the information obtained from financial statement cannot be shown directly to the users. In order to get some useful information from the statements, the user should analyze it effectively under the instruction of a effective analysis framework. The paper consists of two main parts: The former part focuses on constructing a framework of financial analysis, which is the basis of the latter. Firstly, the concept of "financial analysis"is defined, and the purpose of financial analysis is discussed as well. Secondly, the paper shows that most of our financial analyses in China barely are figure games. The main problems are: in short of knowing and analyzing to industry and economy; blindly believe in data of financial statements, blindly believe in ratio and index. After analyzing the deficiency of current financial analysis pattern in China, the thesis proposes a more effective financial analysis pattern which consists of four interrelated procedures: industry environments and business strategy analysis; accountant analysis; ratio analysis and cash flow analysis and prospective and evaluation analysis. The latter part of the thesis is a case analysis of Wuhan Iron and Steel Company Limited(WISCO), just a application of the analysis framework mentioned above. Industry environments and business strategy analysis shows WISCO's business strategies are accordant with the industry environments, and accounting analysis indicates the quality of accounting information is mediate; Financial Ratio & cash flow analysis suggests WISCO's profitability is very good, though its liquidity is a little weak; the conclusion of Prospective and evaluation analysis is that the price of common stock is underestimate a bit. In the end, some simple suggests are proposed accordant with the conclusions.